Supply-side

The Laffer Curve

Shows the relationship between the tax rates and tax revenue collected by governments; as tax rates increase from low levels, tax revenue would increase; if taxes rise too high people stop working; lack of work leads to a lack in income and therefore, a fall in tax revenue

Inflation

Real Interest Rates

mainstream view

instability in the economy arises from price stickiness, changes in investment, and unexpected shocks to aggregate demand or aggregate supply, view monetary policy as a stabilizing factor, prices and wages inflexible in short run

expectations

rational expectations theory

A branch of New Classical theory which holds that firms and individuals have rational expectations about the economy and government policies and thus may pursue their own interests in such a way as to render those policies ineffective.